EUROPE GAS-European gas prices rise on fears of LNG supply crunch
LONDON, March 11 - Benchmark European and British wholesale gas prices rose on Wednesday morning after reports of Iran laying mines in the Strait of Hormuz raised concerns over liquefied natural gas supply.
It also signalled that the Middle East conflict would last longer than expected.
The Dutch front-month contract at the TTF hub, the benchmark price for Europe TFMBMc1, rose 5.7% to 50.09 euros per megawatt hour by 0918 GMT, ICE data showed.
The British April contract NGLNMJ6 rose 6.03% to 127.90 pence per therm, ICE data showed.
"The news of Iranians beginning to mine the Strait of Hormuz would set further barriers to resumption of shipping," said LSEG analyst Ulrich Weber.
The U.S. military "eliminated" 16 Iranian mine-laying vessels near the strait on Tuesday, the U.S. Central Command said in a statement. President Donald Trump warned that any mines laid in the Strait by Iran must be removed immediately.
Goldman Sachs analysts said uncertainty around supply shock duration can matter significantly for gas prices.
"Specifically, a scenario where the market fears that this large supply shock might linger for months creates a sense of urgency to offset the resulting tightening in global gas balances. This is especially the case given that the gas market typically looks to have comfortable inventory levels ahead of the winter," they said in a research note.
Tenders for LNG for delivery in March have remained unawarded, indicating a shortage of immediately available fuel.
This is raising concerns in Southeast Asia, where hotter weather in the months ahead is expected to raise power demand.
The region will also need to compete with European buyers looking to refill storage for their heating season, said Daniel Hynes, senior commodity strategist at ANZ.
Across Northwest Europe, average temperatures are now expected to start falling, with the day ahead being 0.8 degrees Celsius lower, and expected to hit a minimum on Sunday, LSEG data showed.
In the European carbon market, the benchmark contract CFI2Zc1 was up 0.78 euro at 73.69 euros a metric ton.
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